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Motoring to cost more as pump prices rise 6%
By Fu Chenghao |
September 11, 2012, Tuesday
|
Print Edition
Print Edition
China has raised fuel prices rates by more than 6 percent, the fourth increase this year, in response to higher international crude oil prices.
Gasoline goes up by 550 yuan (US$87) a ton and diesel by 540 yuan a ton, effective from today, the National Development and Reform Commission, which sets energy prices in China, said yesterday. That represents average increases of 6.1 percent and 6.5 percent respectively.
In Shanghai, the ceiling retail price for 93-octane gasoline is now 8 yuan per liter, up from 7.56 yuan, 97-octane gasoline rises to 8.51 yuan from 8.04 yuan and zero-grade diesel is now 7.92 yuan, up from 7.46 yuan.
Fuel prices vary among provinces.
Under the NDRC's pricing mechanism, fuel prices can be adjusted when the 22-day moving average of a basket of international crude changes more than 4 percent from the previous adjustment, though it also looks at other factors, such as inflation.
The basket of crude rose 8.43 percent as of last Friday since China last adjusted prices on August 10, according to consultancy ICIS C1 Energy, as upheavals in the Middle East and speculation about more economic stimulus in Europe and the US pushed up prices.
Liao Kaishun, an analyst at C1 Energy, said the latest rise wouldn't be fully reflected in consumer prices. That's because transport companies have limited room to raise freight charges as demand remains tepid amid an overall economic slowdown, he said.
"Still, we'd pay attention to the upcoming autumn farming season," which may trigger demand for diesel, Liao said.
The NDRC has rigidly followed the pricing formula in recent adjustments. The August increase followed a series of three price cuts between May and July amid tepid growth in oil demand as the overall economy slowed.
The commission has been working to improve the frequency of fuel adjustments as part of efforts to make the current pricing system more transparent and predictable.
Liao said that one problem of the current mechanism was that it basically looks at international crude costs and cannot fairly reflect supply and demand in China.
Higher fuel rates would help oil majors Sinopec Corp and PetroChina Co, which both incurred huge losses in their refining business in the first half due to price regulation.
The latest ex-refinery prices would translate to a profit of 524 yuan per ton for refining imported crude oil from Oman but still a loss of 9 yuan per ton for processing crude in Daqing in northeast China, C1 Energy said.
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